Spirit Financial Data Shows Second Straight Quarterly Profit


Aviation Daily Jun 18 , 2009 , p. 12
Andrew Compart





Spirit Airlines turned a $17 million profit in the first quarter, with ancillary revenue at the fee-dependent, low-fare airline accounting for about 21% of its operating revenue, according to figures released June 15 by the U.S. Transportation Dept.’s Bureau of Transportation Statistics.

That marks the second straight profitable quarter for the Florida-based, low-cost carrier following its $49 million loss in the third quarter of 2008. Spirit reported an $11.1 million profit for fourth quarter 2008. In the second quarter of 2008, it made $17.6 million.

The privately held carrier does not report its quarterly financial figures, but must submit them to the DOT, which releases them, as well as data collected from other carriers, several months later.

Barry Biffle, Spirit senior VP and chief marketing officer, said the first quarter profit is in keeping with “two decent years” for Spirit when compared to the rest of the industry.

“In this industry, that makes you one of the tallest midgets,” Biffle remarked. Nonetheless, Biffle said the airline is encouraged about this year, even though, like every other carrier, it has seen some deterioration in demand because of the economy.

The airline’s low costs make it “built to live off low fares,” he said, comparing its business model to Walmart and Costco. He also said its current “run rate” on ancillary revenue as a percentage of total revenue is running in the high 20s, with a take of about $30 per passenger.

That does not mean Spirit is trouble-free, however. For example, management’s relationship with its pilots union has become contentious over issues related to the current and future contract, and the union’s membership voted last month to authorize a strike if contract talks do not proceed and the two sides go into a 30-day, cooling-off period (DAILY, May 20). The contract talks are in mediation.

Also, given the state of the industry right now, the airline does not plan any capacity growth for this fall, Biffle said. But he said the airline does plan to grow — at a rate yet to be decided — in the first half of 2010.

The figures also show Spirit with $108.5 million in cash and short-term investments ($42.7 million of which is cash).

“It’s not the largest cash balance, but if you’re not burning cash, you don’t need it,” Biffle said.